Tradewind expands VaultChain trading platform to silverSumitomo Corporation Global one of the first adopters of Tradewind’s new VaultChain silver platform

Sumitomo Corporation Global one of the first adopters of Tradewind’s new VaultChain silver platform

By Kelsey Rolfe

November 27, 2018

Tradewind Markets has made its VaultChain metals-trading blockchain platform available for silver producers, building on its work with gold mining companies that began earlier this year.

VaultChain Silver went live earlier this month, and Steve Lowe, Tradewind’s head of business development, told CIM Magazine the company is “very happy with the amount of metal that’s flown into the silver platform already.”

Among the first – and, Lowe said, the biggest – users of the silver platform is Japanese trading giant Sumitomo Corporation Global.

“As a global leader in the precious metals business, [Sumitomo] is always looking to leverage developments in technology to better serve our customers,” Sumitomo Corporation Global manager Daniel Izzo said in a statement. “The Tradewind platform provides SCMI US Inc. with an opportunity to capture efficiencies through the digital trading and custody of these precious metals.”

Lowe said the move to silver trading was an “obvious natural extension” for Tradewind, and that bullion dealers and the broader investment community had asked for it.

“The bullion community has a lot of silver, it’s a larger market than gold,” he said. “It’s a much lower price and a higher volatility, so the dealer community said, ‘we need silver as quickly as possible.’”

The company plans to bring on larger organizations, like banks, that do physical metal trading.

In addition to its VaultChain platform for mining companies, Tradewind also allows individual investors to buy and sell gold and silver on its platform.

The blockchain technology being used by Vaultchain is a distributed ledger, which is at its most basic a decentralized system of record. Transactions and data on the network are not verified or stored by a central authority, but spread across a network of users with a unique hashmark such that no transaction or information can be repeated, changed, or modified.

The physical silver being traded will be verified by and stored at the Royal Canadian Mint.

Tradewind launched its VaultChain platform in March exclusively for gold miners, with Goldcorp depositing the inaugural gold on its VaultChain platform. Goldcorp CEO David Garofalo said at the time that storing gold on blockchain would “increase the utility of the commodity and, ultimately, drive the value in the price of gold.” A month later, Iamgold it had made a strategic private placement in Tradewind.

Tradewind’s expansion comes in a year that major mining companies, including Yamana Gold, Lucara Diamond, De Beers and Alrosa, have enthusiastically adopted blockchain solutions to simplify metals trading and supply chain transparency.

Lowe said that the “provenance” aspect of blockchain – being able to tell exactly which company and which mine a dore bar came from – is of particular interest to mining companies right now.

“The mining community is very determined to come up with some sort of technical solution to the issues around supply chain,” Lowe said. “Everyone’s looking at it and very focused on it.”

He said Tradewind’s provenance application will, when it’s launched, allow mining companies to differentiate their gold within the marketplace. The result will be that investors will be able to be more selective when they trade gold – not just purchasing dore bars, but making sure they come from certain companies that meet their ethical standards.

“That works at a retail level, and it works at a wholesale level,” Lowe said. “You’ll have big pools of responsible investing money that will want a responsible gold product, which they can’t get right now.”

He cited the example of large pension funds, which often hold gold assets as part of their total investments. “You’re starting to see now [those fund managers] being asked by the underlying pension holders, ‘are you investing responsibly?’ and they need to be able to say yes.”

Tradewind is “fine-tuning” the provenance application, Lowe said, and the company expects to have it available in the first quarter of 2019.

He said the company will be focusing on gold and silver in the near term, but the next jump may be to platinum group metals – and then, eventually, base metals.

“In a few years’ time could you easily put other commodities on [VaultChain]? Absolutely,” he said. “With base metals, it’s a very different business in terms of the way metal moves around, and the checks and balances involved in that. You could see blockchain being very helpful in the contract world.”

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